05 Aug Politicians Attempt Credit Card Reform
Credit card Bill of Rights faces shifting political winds before a major election. MSNBC.com contributor, Bob Sullivan says the Credit Card Bill of Rights inches forward in the face of competing interests. The House of Representatives passed legislation through its Financial Services Committee that now goes to the full House for debate.
The legislation would tighten rules on credit card accounts, limit some interest on fee charges and require set time periods for companies to mail monthly statements and before companies increase rates.
The bill’s sponsor, Rep. Carolyn Maloney, D-N.Y. says “”This landmark legislation will help level the playing field between card holders and card companies, and give consumers the tools they need to responsibly manage their own credit.”
The House is pushing legislation forward while federal regulators consider their own timetable on similar issues. Federal regulation takes a slower route than Congressional legislation, as fed regulators are required to participate in a public notice and comment period.
One group, the American Banking Association, used the public comment period to announce its opposition to credit card reform. The ABA position warns that credit will be harder to get and cost more, a line previously heard in defense of mortgage reform.
Colleage Wendell Sherk reports that credit card losses are piling up for banks, resulting in less money available for those banks to lend. Banks offer credit based on the amount of cash reserves held by the bank to support the loan. Less cash on hand now means less lending, a result apparently caused by banks extending too much credit rather than restricting the method of lending.
Any legislation passed by the House would have to be reconciled with a Senate version. Then there is the question whether President Bush would sign or veto the bill before he leaves office. A congressional veto override is unlikely.
Bob Sullivan notes that presidential candidate Barack Obama has proposed his own version of a credit card bill of rights, while candidate John McCain has not offered a solution.
Andy Miofsky, Esq.
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